Copper Bounces Back After Trade Pummeling
July 12 2018 - 8:15AM
Dow Jones News
By David Hodari
Copper prices rallied Thursday, after receiving a pummeling on
Wednesday as the latest tariff threats from China and the U.S.
amplified worries about the impact of a trade dispute on the global
economy.
The base metal was up 0.9% at $6,192 a metric ton in late
morning trade in London, after shedding as much as 4% on Wednesday
to hit its lowest point in almost a year. Copper futures have
plunged 17% from a four-year high in June, bringing it close to a
bear market.
Gold also climbed, ticking up 0.2% to $1,244.26 a troy ounce,
recouping some of the losses from Wednesday as the effects of a
stronger dollar outweighed that of the global risk-off
sentiment.
Global equities markets--including those in China--and most
commodities staged a resurgence Thursday after coming under heavy
pressure the previous day after the White House said Tuesday that
it will assess slapping fresh 10% tariffs on $200 billion in
Chinese goods. China threatened to match U.S. tariffs with its own
countermeasures.
Those geopolitical and macroeconomic considerations appeared to
be outweighing copper-specific factors, with traders apparently
disregarding stories that would normally weigh on prices.
Freeport-McMoRan Inc. (FCX) and the Indonesian government struck
an "initial agreement" on Thursday for the joint-owned copper mine
at Grasberg to move toward state ownership. State-owned PT
Indonesia Asahan Aluminium (Inalum) will receive a 51% stake,
raising the state's holding from around 9%. Grasberg has the
world's largest gold deposits and the second-largest copper
mine.
Freeport's share of the payment will be $350 million, while Rio
Tinto PLC (RIO) will take $3.5 billion for its stake.
The deal sees one of the copper market's largest source of
uncertainty in recent years move one step closer to its conclusion
with the agreement bringing an "increase the security of copper
concentrate supply on the world market," analysts at Comemrzbank
said in a note.
Similarly, BHP Billiton PLC (BLT.LN) handed a proposal for a new
labor contract to the union at its mine at Chilean Escondida--the
world's largest--that includes inflation-linked salaries and a
$23,000 bonus for each worker, according to Reuters.
The 44-day strike that supported copper prices last year has
weighed on investors' minds in recent months, with some market
participants using the negotiations as a key plank in early 2018
forecasts for higher copper prices. Talks have proved smoother than
expected, though.
While the offer falls short of recent union demands,
geopolitical pressure on copper prices makes BHP's offer more
palatable to miners, according to John Meyer, an analyst at SP
Angel.
Investors were monitoring those negotiations and any further
trade news out of Washington and Beijing.
Among base metals, zinc rose 0.43% to $2,575, tin traded 0.7%
higher at $19,490, and nickel was up 2.76% to $14,330, with all
prices for a metric ton. Aluminum fell 0.02% to $2,060 a metric
ton, while lead declined 2.56% to $2,147.50.
Among precious metals, silver rose 0.57% to $15.88, platinum was
0.53% higher at $832.86 and palladium climbed 0.15% to $942.88, all
per troy ounce.
Write to David Hodari at david.hodari@wsj.com
(END) Dow Jones Newswires
July 12, 2018 08:00 ET (12:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Freeport McMoRan (NYSE:FCX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Freeport McMoRan (NYSE:FCX)
Historical Stock Chart
From Sep 2023 to Sep 2024